Beneficial Ownership Registers: Overseas Territories and Crown Dependencies

I beg to move,

That this House notes the implementation of public registers of beneficial ownership in the UK’s Overseas Territories and Crown Dependencies; believes that the Government needs to respect the will of Parliament and meet the implementation deadline at the end of 2023; encourages the Government to lay an Order in Council formally requiring the UK’s Overseas Territories to implement public registers of beneficial ownership if the deadline is not met; and considers public registers of beneficial ownership to be an essential transparency measure to combat tax evasion, money laundering and other economic crimes.

This debate should not be necessary. The House expressed its view when it agreed an amendment to the Sanctions and Anti-Money Laundering Act 2018 that required overseas territories to voluntarily introduce registers of beneficial ownership within two years or face an Order in Council mandating compliance. Five years have passed since the right hon. Member for Sutton Coldfield (Mr Mitchell) and I moved the amendment, and the only overseas territory to comply with the legislation is Gibraltar, which I salute. While I understand that the Minister is making progress with some of the other jurisdictions, they have yet to comply with our legislation.

Journalists have revealed that the family of Asif Aziz, a landlord to my constituents in Britannia Point, Colliers Wood, manages a large property portfolio registered under dozens of companies on the Isle of Man. There is no beneficial owner listed, so complaints can never reach the landlord. We already have legislation that requires offshore companies that own properties to declare their owners on a register. Does my right hon. Friend agree that properly resourced enforcement is essential, and that having public registers of beneficial owners would make it much easier to identify and scrutinise the beneficial owners of offshore shell companies?

I am grateful to my hon. Friend for bringing that to our attention. Sadly, it is an issue not just of enforcement but of definition. I bet that the landlord in her constituency owns the properties through a trust, and there is no openness about beneficial ownership of trusts. She makes a very important point.

I apologise for not being able to stay for the whole debate.

I strongly support this debate. I put it to the right hon. Lady that the reason why people hide things in trusts and offshore is either to avoid embarrassment or to avoid tax. People ought to do better, so that they will not be embarrassed, and they ought to pay tax properly.

I thank the hon. Member for his support. I agree that it is partly about reputation and partly about avoiding tax, but it is also about indulging in economic crime, from money laundering through to the worst crimes that stain our country and our economy.

As the Father of the House has just intervened and I am the longest-serving Member on the Opposition side of the House, may I say that I am a long-term supporter of what my right hon. Friend has been trying to do? Owing to our time together as undergraduates at the London School of Economics, I know that she is a determined woman. Let us get on with it—let us hold these people to account and change the law.

I thank my hon. Friend for his support—he is probably my oldest friend in the House; we go back many years—and I hope that the Government heard his urging.

Could we add one more to the list of reasons why people conceal their identities in this way, which is to avoid sanctions, including sanctions placed by our own Government?

The right hon. Member makes a really important point, which I will come to later. He is right: this is a national security threat as well as a threat to our economy.

The Government have yet to comply with the legislation by making an Order in Council to mandate compliance by the overseas territories. After discussions between the Crown dependencies and the right hon. Member for Sutton Coldfield and myself, the three Crown dependencies —Jersey, Guernsey and the Isle of Man—announced in May 2019 that they were committed to introducing public registers and set out a plan to do so. Although I welcomed that in principle, I was concerned that their commitment was qualified and that their action plan contained a number of opt-out clauses. However, on the basis of their commitment, we chose not to legislate but to trust them. It now seems that our trust was misplaced. They are reneging on that commitment and using every excuse not to comply.

I understand how strongly the right hon. Member feels. May I point out that, as a matter of constitutional fact, we have no right to legislate for any of the Crown dependencies? Constitutionally, they are not subject to the jurisdiction of this Parliament.

I have enormous respect and time for the hon. Member, but I have an opinion from a renowned KC that we sought at that time—I will come to it later—which contradicts entirely his point and says that we do have the constitutional right to legislate.

I want to comment not on the substance of what the right hon. Lady is talking about but merely on the procedural aspects. She will know that the Procedure Committee is looking at the impact of legislation in this place on devolved legislatures, the overseas territories and the Crown dependencies, and I am interested in her comments and look forward to her speech, but does she agree that we should try to find a way for the voice of the overseas territories to be heard when we legislate in this place if there are implications for them?

Indeed. I would love for us to be able to do this in a consensual way; that would obviously be the best way to proceed. Sadly, we have been waiting for 10 years, and my patience has worn a little thin. Given the implications both for national security and for the economy, the time has come to say, “Enough is enough.” We should use the powers that we have.

The right hon. Member is being generous with her time. The 2022 ruling of the Court of Justice of the European Union stated that unrestricted public access to beneficial ownership information was incompatible with the right to life. Will she cover that?

I will. The hon. Member will know as well as I do that we are no longer a member of the European Union, so we are not bound by that finding.

Why does all this matter? The epidemic of tax avoidance, tax evasion and economic crime flourishes in an environment of secrecy, and our overseas territories and Crown dependencies facilitate that secrecy. We know from the ever-growing number of leaks of data on financial misdemeanours that their role is central to enabling economic crime. Half the shell companies exposed in the 2016 Panama papers were incorporated in the British Virgin Islands. In 2017, the Paradise papers—a massive tranche of documents leaked from the offshore law firm Appleby—showed that a frightening number of frontline politicians held secret accounts, with the overseas territories appearing prominently as destinations of choice for hiding money. Those included people such as Justin Trudeau’s chief fundraiser, Donald Trump’s Commerce Secretary, Brazil’s Finance Minister, Uganda’s Foreign Minister, and our own Lord Ashcroft, who had—and probably still has—a Bermuda-based trust where he hides some of his wealth.

Some 20% of the files in the FinCEN—Financial Crimes Enforcement Network—leak of 2020 contained clients that listed an address in the British Virgin Islands. The leak also revealed, because it was a leak of documents from an American agency, that the Americans viewed Britain as a higher-risk jurisdiction for its role in money laundering and financial crime. The Pandora papers leak of 2021 involved 12 million files, with data from 14 different law firms and company services providers. Over two thirds of the companies analysed in that batch of leaked documents were registered in the BVI. A World Bank review of 213 corruption cases that were investigated over the 30-year period to 2010 found that 70% involved anonymous shell companies. The UK, its overseas territories and Crown dependencies accounted for the second jurisdiction in terms of the number of corruption cases associated with it.

What I am learning from my right hon. Friend’s excellent speech is that London is the centre of the world for hiding money, because so many professionals in this city know how to do it. Is that correct?